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How To Launch & Grow A Forex Trading Business Legally Under Regulated Environment Globally?

From License Till Regulatory Reporting

Legal Scrutiny
Licensing
AML
Litigation Handling

“Before Starting Forex Business need to know Foreign Exchange Act & Regulations”

“Running Ponzi Scam in the name of forex trading will put you in trouble & Imprisonment is must. Be aware of Legal licensing & Regulatory reporting.”

“Stop collecting huge amounts of money in the name of huge return & if you are forex broker then check out your Licensing need.”

Forex Regulatory Organizations

For retail FX traders, the biggest risk of non-regulation is that of illegal activity or outright fraud.

Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions, and guidelines.

Forex market regulation refers to the rules and laws that firms operating in the forex industry must follow. But regulation is more than just having rules in place, it’s also about the ongoing oversight and enforcement of these rules.

The purpose of regulation is to protect you from undisclosed financial risk and fraud.

The forex market is by far the largest, most liquid market in the world, with more than $5 billion traded daily.

Due to its decentralized and global nature, the forex market has been more prone to fraud and has been less regulated than other financial markets. How do you regulate a market this big? And one that trades 5 days a week, 24 hours a day, all over the world?

Its size and scope create unique challenges regarding market regulation.

How do you eat an elephant?

One bite at a time.

How do you regulate the forex market?

Apparently, one country at a time.

There is no single global body governing the forex market to police the massive 24/7 market.

Instead, several governmental and independent bodies supervise forex trading around the world.

The supervisory bodies regulate forex by setting standards that all brokers under their jurisdiction must comply with.

These standards include being registered and licensed with the regulatory body, undergoing regular audits, communicating certain changes of service to their clients, and more.

Licensed forex brokers are subject to recurrent audits, reviews and evaluations to ensure that they meet the industry standards.

This helps ensure that currency trading is ethical and fair for all involved.

Every country has its regulatory authority that lays down the framework of rules that are to be complied with when operating in the forex trading market.

Each forex regulatory body operates within its own jurisdiction and regulation and enforcement vary significantly from country to country.

Below is a list of financial regulatory bodies for each country in alphabetical order.

How to set up a forex brokerage in UAE

Forex Trading License in DIFC

DIFC is a premier financial hub based in Dubai. It offers a unique variety of benefits to its registered entities including the accessibility to regional wealth and investment opportunities, 100% foreign ownership, advantageous taxation system, international legal system based on the English Common Law and exemption from the local UAE Laws.

All these benefits make DIFC, the premier choice of Forex Traders who intend to establish their presence in the UAE, GCC and Middle East.

DIFC allows the Forex Trading Services under the Category 3A License called the Brokerage License. Under the Brokerage License, a Licensee can trade in forex, commodities and derivatives. DIFC Brokerage License allows for ‘Dealing in Investments as Agent’ and ‘Dealing in Investments as Principal’ (matched Principal basis).

Dubai Financial Services Authority (DFSA) is the supervisory body that oversees and regulates DIFC entities with the high risk activities including the Brokerage License.

Forex Trading License in DMCC

DMCC is one of the prestigious hub for global trade in Dubai, UAE and the fastest growing free zone. DMCC is the outcome of strategic initiative taken by the Dubai Government to provide a marketplace with necessary physical and financial infrastructure to run a thriving commodities market.

Entities based in the DMCC enjoy many advantages including but not limited to the 100% foreign ownership, advantageous taxation system and world class infrastructure.

DMCC offers Forex Trading activity under the head of Trading Proprietary account on regulated exchanges (DMCC). DMCC companies with such activity are allowed to trade their own money in FX, OTC and Exchange Traded Derivatives on regulated exchanges.

Setting Up in the UAE

The Central Bank of the UAE, besides having responsibility for monetary policy and banking, is in charge of supervising Forex brokers and activities conducted. The Central Bank is also authorized to grant licenses to brokerage companies dealing in currency trading and commodities or intermediary companies.

Obtaining a Forex trading license from the Central Bank is not an easy procedure, as there are multiple provisions in place to ensure that the brokers who do get licensed offer high-quality services and conduct their business in a fair and transparent way.

The Central Bank works alongside the SCA (Securities and Commodities Authority) to make sure all the prerequisites are fulfilled prior to issuing a license. The most important amongst these requirements are that the Forex broker should be a UAE citizen. Secondly, at least 60% of the total paid-up capital in the company should be national shareholding. Finally, the minimum capital requirement ranges between one and three million Dirham, which is dependent on the nature of activities. These requirements ensure that regulated UAE Forex brokers are able to provide reputable services to their clients.

The SCA also plays an important role in the process of licensing and monitoring and has a duty to ensure that registered Forex brokers in the UAE remain compliant with the law and keep their business practices fair and honest. The SCA seeks to protect traders and improve the financial markets generally by creating and tailoring legislation in accordance with the circumstances focusing on transparency, fairness and equity.

Any broker intending to provide forex trading services will therefore, be regulated by the Central Bank of the UAE and licensed by the SCA.

The UAE government also offers potential investors the option to set up a financial business in the region whilst retaining 100% ownership of their businesses. Both ADGM in Abu Dhabi and DIFC in Dubai are exclusive economic zones for financial companies, including brokers who may be considering a Dubai forex broker license. The only drawback for companies in this free zone is that they are not allowed to directly trade with the local market. UAE free zones have their own registration regimes, practices, and procedures.

Abu Dhabi Global Market (ADGM)

ADGM is located in the capital of the UAE and has 3 independent authorities. These are the Registration Authority (RA), the Financial Services Regulatory Authority (FSRA) and the ADGM Courts. The FSRA is the regulatory body for financial entities operating within the ADGM financial free zone.

Dubai International Financial
Center (DIFC)

DIFC is a designated area in Dubai operating under an independent regulatory and legal system as a financial free zone. DIFC seeks to provide a secure and efficient platform to allow financial institutions and businesses to develop and expand within and beyond the region. The Dubai Financial Services Authority (DFSA) oversees all Forex brokers with a DFSA forex license. Strict DFSA regulatory procedures are enforced to ensure that all companies under its auspices, toe the line when it comes to Forex trading activities. To sum up, the UAE provides Forex brokers with various set up options offering advantages such as zero percent corporate tax, an extended double tax treaties network, world class infrastructure and a friendly business environment.

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